A few years ago I had the opportunity to start a full LSP (licensing service provider) licensing business from the very beginning of licensing activities and growing the business with a licensing business model. Later on I repeated the process in MSP and VARs especially for those who had the desire to grow their Volume licensing business. And now the change towards Cloud licensing especially with the CSP program has given me the chance again to work on licensing business models transformation, for this reason I thought was relevant to comment on the CSP licensing model concepts that all CSPs should assess.

Adapting to a Cloud revenue business model is not an easy transition and sales teams, business owners and many others are reluctant to change the traditional transactional model to a subscription based model, but obviously signing to the CSP program is already a commitment towards applying the necessary changes on the business model required.

CSPs must be “licensing ready” and should assess the business to successfully plan activities: knowing about licensing is not enough, controlling subscriptions, transitions from volume licensing to subscription licensing, client ROI impact and SAM maturity, between other topics,… all is essential to all CSPs…

Some questions to resolve: has the CSP a volume licensing or hosted licensing business in place? What is the CSP licensing selling strategy? Is the CSP reactive to renewals? How successful it has been to capture net new Cloud clients? Is the CSP in a position to sell Office 365 or Azure Services? Is there sales team members knowledgeable enough to offer Cloud subscription models? Can you transition from SPLA to other cloud licensing? Is the sales team incentive align with the achievement of new monthly recurrent revenue? Has the CSP SAM services at all? Is the CSP SAM service aligned with client expectations or works just as a necessary exercise due to partnership obligations for audits? How many current clients versus net new are required to obtain to keep CSPs revenue expectations?

The end goal of any assessment exercise towards licensing sales business is to create a strategy for sales and operations that can capture clients and operate efficiently to create revenue. Some CSPs plans have not contemplated all risks, for example:

Many CSPs are finding that some sales efforts are futile with clients that transact with Enterprise Agreements via qualified resellers or LSPs (Licensing Solutions Partners), it is necessary to know how to pick the battles and be ready to fight the arguments of licensing agreements, making sure that clients don’t get involved between the subscription margin fight from the different resellers and see the services value as the true differentiator. As it is today between CSPs and LSPs with CSP expectations (all of them) the battle for the Cloud is on…

Assess, plan and get the right licensing trusted partners and distributors. Get the right SAM independent partner (you can always ask me for their names), be familiar with distributors CSPs advantages and get yourself ready to get into the wonderful world of software licensing in the Cloud era.

To subscribe to the Cloud directly is easy, is a simple transaction based on consumption, however the co-existence of old traditional Volume licensing, or Service Provider licensing programs with the new Cloud subscriptions is not that easy. In fact to make sure that new benefits for the Cloud enablement like the Software Assurance Mobility Rights are properly used requires attention to the licenses allocated to the servers on Windows Azure, for example. Understanding the real rights and possibilities is another variable to contemplate when measuring compliance.

Hosted providers do not offer much guidance with respect of what their clients can allocate on licensing into the Cloud environments, and is often a conflict of responsibilities when the vendor audits the hosted provider or the end-user client.

In the Microsoft Product Use Rights for example we can observe the limitations of the licenses covered by SA with respect to their Cloud options with the Mobility Rights: (see table below)

Understanding the right coverage of the license is important in order to maintain not only compliance but also to predict Cloud budgets.

Clients with an Azure consumption negotiated on their Enterprise Agreement can use any of the services and increase without difficulty, and as they evolve using the Cloud services will be important to understand the ROI of the existing licenses versus the newly consume and fully subscribed licenses. In a way Cloud has enable transitions of existing licensing investments however at the same time is creating a conflict:

Is the Cloud subscription directly on Microsoft Azure a better option than the SA Mobility Rights?

As prices vary, the Cloud footprint extends and upgrade cycles arrive, the SA renewal will be confronted by the commitment to Azure subscriptions in a way that customers will choose one or the other.

For Microsoft clients using other third-party hosted providers the question is:

Have I allocated the compliant rights of use on the Cloud? and if I consume SPLA, is my hosted provider compliant? Am I compliant? Or am I at risk due to hosted provider error?

I can confidently say that Software Asset Management has become more relevant in the Cloud era.

Microsoft is definitely the great influencer of Software licensing; when Microsoft develops and promotes new rules may other vendors follow. During this last World Partner Conference, that just happened in Washington DC, I observed the influence of Cloud now directly affecting the Software Asset management (SAM) approach.

Cloud and SAM

Not long ago I was questioned by other SAM peers on my approach towards Cloud and SAM, the interaction of the old licensing models affected by the new subscription models seemed for some the end of the need of the licensing advisors, however I always thought it was only an adaptation of the SAM knowledge towards new exciting models to compliantly license software.

Microsoft is going all or nothing to the Microsoft Cloud offerings, I am glad that my guess has been right for so long with respect of being aware on how to measure, what to investigate, and how to determine the right Cloud licensing solution, because now SAM has to fulfill the qualification to move the right IT budgets towards Cloud in order to fulfill the great demand and transformation that Cloud is making in organizations everywhere. SAM has now a special role in regards to Cloud, it has to monitor the usage, contemplate the rules and repurpose licenses for an optimal transition.

SAM and Services

Some SAM professionals identify their task as auditors as the more relevant with respect to the services thy offer. However I disagree, in fact SAM has to be hand in hand with technical, and business assessments to actually not only portray a licensing position but to guide any organization to transformation. The new era of SAM services has to require a true alignment between business goals, technical requirements and licensing.

SAM 2.0

SAM is now critical in order to govern software and identify the possibilities of Cloud computing, outsourcing databases, access to BI integrated products, assessing security tools and allowing a new perspective of IT expenditure that walk with business objectives. The New Order of SAM services will create once again a differentiation between those that will be stuck in the old reseller ways, just contemplating the exercise of an audit without any other variable added, and those that understand the new realities and needs of IT on today’s market.

IT is truly a great moment for SAM services that can play a significant role on the era of Cloud.

We live in an Application driven IT world. Whether its our Cloud-based phone apps, our computer apps, or the applications in our servers and hosted datacentres, everything is moving towards applications that will improve our productivity. Technical complexity is increasing rapidly and we are consuming more applications than ever before.

I have come to understand the value of application packaging. Initially, I thought it was simply creating an automated process of imaging applications to be delivered. However, I have to come to realize that its a lot more than that. Application packaging:

Allows one to conform to standards despite their edition and version.

Provides the ability to test applications before moving to production.

Delivers the same application, yet tailored to specific needs or departments.

Provides process and characteristic documentation without having to spend hours writing and collecting screen shots.

Enables a licensing person, through the process, to control and manage assets (Software Asset Management (SAM)).

For this reason it is now part of what I envision to provide my clients. That vision is to deliver a robust strategy that not only takes care of SAM inventory and reconciliation, but also goes to the root and applies application packaging best practices.

The Microsoft WPC 2013 is all over Office 365, Azure, Intune and Dynamics.

Cloud is clearly not to be sold but sold already and partners are trying to decipher the way to create the services and value.

Office 365 changes are coming soon. For example Microsoft partners will be able to sell more than the Midsize business sku to their customers through distribution and soon they will offer E programs and Exchange online for example. This is a significant change for Managed services providers that now can offer O365 to their clients without having them to register on their own to the Cloud solution.

Midsize business in Office 365 will also see the change to be able to accept other subscription registrations under the same company domain, like combining it with Kiosk. No ETA for the change but Microsoft said MSLI (the all-powerful licensing department) is looking into the changes to the terms and conditions.

Microsoft listened, I sense a more humble approach to concerns and realization that they can win the productivity Cloud war right now to gain momentum as in the past beyond the competitors.

The windows device ecosystem with Windows 8, and soon 8.1 is focused on user experience and that shift also will help Microsoft to gain tradition on the consumer market and the mobile phone market.

It is going to be a hard choice n the device for users however on productivity tools, integrated systems Microsoft has position itself very well.

These days I have to answer often to the question regarding downgrade rights from Office 365. It is different from Volume Licensing. When you subscribe to the E3 or E4 programs for example you are making a decision to upgrade to the latest Office edition of the moment.

There is a small window now to still subscribe to Office 365 and get office 2010 until 8-APR-2014.

After that it will be Office 13 the only available download for Office.

How to be strategic on this?

Time for standardization and upgrade office is a good timing to move to an Office 365 subscription. It is easier to move from one or two editions behind than from a seven or eight year difference. So as dramatic the change can be now, and training is recommended, later upgrades can be done often, at no additional cost and less dramatic.

Once you are using Office from Office 365 you cannot downgrade the edition. Even is you have to change a device and were used to Office 2010 in the moment that Office 13 is the only edition available is the only one you will be able to deploy

It brings some inconvenience and is the way for Microsoft to force latest edition behavior.

There are two ways to move your Enterprise Agreement (EA) to the Office 365 subscription

Obviously is an important topic these days as it is difficult to understand how you will be able to continue your EA investment and control costs during your way to the Cloud.

Every Office 365 plan as an equivalent on the CAL side to your EA, if your EA includes CALs. If you transition to an equivalent during the term then there is no increase of cost. However if you transition to an Office 365 option that includes more than your current EA you will incur into additional costs however highly discounted.

So basically there are two options for you

Move to Office 365 on equivalent subscription and continue annual payments until renewal

Increase licensing at a discounted price

True licensing experts could help you on the transition (ask me how @mslicensing or email me)

it is important to evaluate what can go Office 365 and which licenses will have to remain on the EA, specially if you create a hybrid model on your infrastructure.

Office 365 subscription users have won the battle, earlier than I expected, to have rights for Remote Desktop Services (RDS) or previously named Terminal Services.

Thanks to the new changes just published by Microsoft, Office 365 can now we deployed as well on RDS scenarios.

The text on the Product Use rights says the following:

“Each user may also use one of the five activations on a network server with the Remote Desktop Services (RDS) role enabled.” (PUR English Page 82, January 2013)

What does this mean? It means that Office can be installed with the MSI-based installation (MAK, KMS and Ad-based activation) required for RDS. Office can also be installed on Click-to-Run installation, with the built-in App-V foundation.

This allows clients to move to Office 365 licensing and benefit of all the features and serve thin clients, or any other RDS scenario.

Great news as it allows more flexibility.

One more reason to move to subscription what you used to buy on perpetual licensing…